A puddle from rainfall is reflected in the smaller of two town water tanks off of Bald Top Road in Fairlee, Vt., on April 7, 2017. The larger, 265,000 gallon tank needs to be replaced after only 12 years of use -- town officials are pursuing a $3.9 million bond this summer to revamp the town's water system. (Valley News - Geoff Hansen) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Barry Larson, assistant operator for the Fairlee Water Department, performs a daily water quality check at the town's pump house near the Connecticut River in Fairlee, Vt., on April 7, 2017. Larson also checks seven other sites once a month for levels of phosphates and chlorine residuals. (Valley News - Geoff Hansen) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Lance Colby, chief operator for the Fairlee Water Department, performs a daily water quality check at the town's pump house near the Connecticut River in Fairlee, Vt., on April 7, 2017. Colby said the system was put online in the early 1970s after state regulations required it to be moved from Lake Morey. (Valley News - Geoff Hansen) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

A 265,000 gallon municipal water tank, shown off of Bald Top Road in Fairlee, Vt., on April 7, 2017, needs to be replaced after only 12 years of use -- town officials are pursuing a $3.9 million bond this summer to revamp the town's water system. (Valley News - Geoff Hansen) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Fairlee — With just weeks to go before voters decide whether to reconsider an $850,000 Town Hall renovation bond, town officials have announced they are pursuing a larger, $3.9 million bond this summer to revamp the town’s water system, which has been plagued by a variety of ills including bad-tasting water and a failing water tank.

Discussion about repairing the town’s water infrastructure was prompted largely by the Town Hall renovation. After town residents approved undertaking the work at the municipal building, a group successfully petitioned for reconsideration after arguing that the town’s water system should be given priority.

Selectboard member Cathy McGrath, who unveiled the water system bond during a public hearing on the Town Hall project Wednesday night, said the actual amount borrowed by voters will be far below the maximum amounts provided for in the two bond proposals.

“There’s no way a town like Fairlee is going to just borrow $3.9 million,” McGrath said.

That’s because the town is pursuing other revenue sources, including donations, grants and, in the case of the 265,000-gallon municipal water tank off Bald Top Road that needs to be replaced after only 12 years of use, a legal settlement from the company that built it.

But McGrath, who has worked for much of her professional career advising nonprofits on fundraising campaigns, also said there’s no way to predict exactly how much of the expenses might be defrayed.

The failing tank is the subject of potential litigation between the town and the company that built it in 2004. Though the tank was supposed to last for 75 years, town officials noticed visible cracks in it almost immediately after construction, and in 2015, divers cleaning the tank discovered that chunks of concrete were falling from the ceiling into the interior.

Town officials are saying little about the possibility of litigation, which hasn’t progressed beyond exchanges between attorneys. But Selectman Jay Barrett said the hope is that the town will be “made whole,” though it’s unclear how much money that entails. The town borrowed $800,000 to build it and would spend a little more than $1 million to replace it with a glass and steel tank.

The project was designed by civil engineers with the Essex Junction-based firm Forcier, Aldrich and Associates, and was built by Paragon Construction, an Orford-based firm. Barrett, who also is an architect, said that though Paragon has ceased to exist, and the design firm reorganized as Aldrich + Elliott in 2011, the town is seeking compensation from the insurance companies that insured the work.

Efforts to contact both firms for comment were unsuccessful.

In addition to the tank replacement, the bond would pay for a $1,377,000 water softening and filtration system, which town officials said is needed because some of the 350 municipal water customers have complained of bad-tasting, hard water that contains high levels of manganese. Most customers, including the Lake Morey Resort, live at the south end of Lake Morey.

The rest of the bond money, $1,433,000, would replace about 1.6 miles of water main. McGrath said it’s possible that some of those costs will be borne by system user fees, rather than through property taxes.

“I could see dividing it so that the water main expenses and the filtration may be covered 100 percent by users,” she said. “I also could see doing it so that the costs associated with the new water tank would be covered through taxes, by the entire tax base. We’re just looking for something that is equitable.”

The other big question mark is how much of the cost might be covered by a federal USDA Rural Development grant. The grant could cover as much as 45 percent of the entire $3.9 million cost.

Water Department Chief Operator Lance Colby believes only 1,200 feet of pipe need to be replaced.

Colby, who was publicly reprimanded by Barrett for publishing cost estimates for the water tank replacement in the 2017 Town Report, said he thinks more research should be done before the town settles on the filtration system covered by the cost estimate.

“Let’s do two or three different proposals,” he said. “Let’s not go with just one.”

Colby said that, while he has received phone calls complaining about the taste of the water, he can usually resolve it by going to the customer’s hot water heater and changing out the anode rod.

Town Hall

The proposal to renovate the water system has emerged on the eve of an April 26 re-vote on the $850,000 bond to finish a 20-year renovation project for the colonial-revival-style Town Hall along Route 5 in Fairlee Village.

The bond was approved at a special Town Meeting in February with 58 percent of the vote, 146-105, but 90 residents petitioned the town to reconsider because, they argue, the Town Hall should not be a priority when the community is facing unknown expenses associated with the water system.

That Town Hall bond would help finance a $913,500 project that would include installing an elevator and fire-rated stairs leading up to the second-floor auditorium, bringing the front entrance and bathrooms into line with laws requiring handicap accessibility, and other improvements.

As with the water tank bond, the town hopes to tap other revenue sources, namely $125,000 in grants and $170,000 in private donations that would bring the amount borrowed down to $618,500.

Fairlee resident and former firefighter John Durgin circulated the petition that brought the Town Hall bond back to the ballot box because, he said, the public approved that bond without understanding the full scope of the water system problems.

Knowing that the $3.9 million will come before voters by early August, a timeframe that town leaders said is needed to qualify for the USDA grant, could change people’s minds, Durgin said.

“My jaw dropped when they rolled out those estimates,” Durgin said.

But McGrath and Barrett have characterized the renovation as serving the needs of people with disabilities, including wounded veterans.

“They are entitled to the same rights and privileges that you and I are,” Barrett said in March.

They also see the Town Hall’s second-floor auditorium as an important component of a broader effort to bring in more visitors, and revitalize the town.

“There’s a lot of momentum right now in Fairlee,” said McGrath. “We have a couple of new restaurants that are drawing folks from out of town into town. There are young people coming in. The school district is extraordinary. We’ve got a lot going on.”

Transparency and Timing

Durgin, who began his petition campaign well before the Selectboard made its intentions for a water system bond public, accused the town government of intentionally withholding information so that voters would be more likely to approve the Town Hall bond.

“That was their plan all along anyhow, in my opinion,” Durgin said. “I think they do a good job, but I think they missed the importance of the water issue, or they minimized it until this bond went through.”

McGrath said that when it became clear that the town was going to pursue compensation for the defective water tank, Chris Callahan, an attorney representing the town, told town leaders not to publicly disclose information about it, for fear that it could weaken the town’s legal case.

In addition, she said, “we didn’t have all the information six months ago.”

McGrath said that changed on March 21, when town leaders had what she called a “come to Jesus” meeting with the engineers and attorneys.

“At that meeting,” she said, “we were very aggressive about the need to share as much information as we could with town residents without damaging the litigation.”

As a result, she said, Callahan signed off on the information included in this week’s public presentation, which is vague about the possible legal action, but includes specifics about the larger bond, its costs and the scope of the work.

Durgin said that the Selectboard only acted in response to pressure created by the petition.

“What I think happened is, we called them on the fact that this tank and water system are a far bigger issue than they were letting on,” he said.

McGrath said the important thing now is to make good decisions about both bond packages.

“Let’s look forward,” she said. “Instead of being unhappy about the level of information that was available to the town six months ago, let’s think about what’s best for the town moving ahead.”

Durgin argues that with so many question marks surrounding the water system bond and its impact on taxpayers, the Town Hall project should be delayed.

He said he might favor a smaller project to make the bathrooms accessible, but that the big-sticker items associated with making the second floor useful — the elevator and fire-rated staircase — are luxuries that the town can’t currently afford.

On the other side, McGrath argues that this is the exact right time to do the projects, because both could get dramatically more expensive in the near future.

There’s even more pressure, she said, because of the potential loss of grant opportunities that would be threatened under the budget plan recently proposed by the Trump administration.

“Those may not be there next year, given what we see in Washington these days,” she said.

In addition to the USDA grant that could dramatically lower the cost of the water system bond, she said, there are also smaller grants totaling $475,000 that the town will pursue for the renovation project.

A second public hearing on the Town Hall renovation bond reconsideration is scheduled for 7 p.m. on Thursday, April 13, in the Grange Room of Town Hall.

Matt Hongoltz-Hetling can be reached at mhonghet@vnews.com or 603-727-3211.